3i disposes of European start-up investments

The transaction includes 29 European venture capital investments and follows 3i's decision last year to withdraw from early-stage investments and focus on buyouts, growth capital and infrastructure assets.

Financing is being provided by U.K. group Coller Capital and U.S.- based HarbourVest.

News of the potential deal first emerged last month.

DFJ Esprit, based in Cambridge, England, is a subsidiary of Draper Fisher Jurbetson, one of Silicon Valley's best-known venture capital groups.

The £130 million price tag is said to represent a discount of 16 percent to the March valuation of the assets in 3i's latest accounts.

The investments include Icera Semiconductor (Bristol, England), picoprojector start-up Light Blue Optics Ltd. (Cambridge, England), Cambridge Semiconductor, power amplifier company Nujira, also based in Cambridge, and the Cloud, one of Europe's major wireless broadband access providers.

The portfolio will be managed by DFJ Esprit through a new division called Encore Ventures, which will focus on acquiring and managing secondary venture portfolios. The venture capital group said Encore I, the division’s first fund, will have a maximum size of £ 170 million ($280 million) and will have Coller Capital and HarbourVest Partners as its sole investors.

Jeremy Coller, Chief Investment Officer of Coller Capital, said: "This portfolio of exciting young European technology companies has benefited from 3i's very able stewardship. We're privileged to be taking on the baton, and we look forward to working with DFJ Esprit and HarbourVest Partners to support the continuing development and success of these companies."

3i said the deal will help reduce its debt load, which stood at £2.11 billion at Dec. 31 of last year. The company has already sold a large chunk of its venture capital portfolio in the U.S. and in Germany.

Separately, DFJ Esprit said it had formed another fund, DFJ Esprit III, a venture that will have assets of $215 million and target early and later stage technology companies across Europe. This will be in addition to the Encore Ventures vehicle.

A first close has commitments of $100 million, from some of Europe's leading institutional and public sector LPs such as the European Investment Fund, Finnish Industry Investors, Partners Group, JP Morgan, LGT Group and Harbourvest.

DFJ Esprit's current portfolio of over 60 companies has a combined turnover of nearly £600 million ($1 billion) and achieved growth of over 40 percent in aggregate in 2008.

Current portfolio companies include Displaylink, XMOS, Greenpeak Semiconductors and Imagine Telecoms.

Related Articles:

No time for a startup?

Genesis of a VC firm hints at a path to Business' renewal

VC groups join forces across the Atlantic